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HOEC proving hard nut to crack for Hardy

Vol 14, PW 20 (07 Apr 11) Exploration & Production

UK-listed Hardy Oil & Gas must feel like the Greek mythological figure Sisyphus who was condemned to push a boulder uphill forever.

PETROWATCH learns operator Hardy has once again failed to reach an agreement with partner HOEC over the fresh redevelopment plan for the PY-3 oilfield offshore Chennai, meant to be submitted to the DGH by the end of last month (March). Little progress, it seems, was made at a PY-3 consortium meeting held in Chennai on March 30 to decide on proposed development drilling at the NE-1 location.

HOEC continues to view the proposed well at NE-1 as “purely exploratory” and favours drilling a development well at the PD-7 location instead. “HOEC says PD-7 is further towards the core area of the block and so more likely to succeed as a development location, unlike NE-1, which lies on the northern flank of the field,” says an industry source.

HOEC, he adds, has been instructed by its PY-3 partners Hardy, ONGC and Tata Petrodyne to “formally write” to them and give reasons for its persistent opposition to NE-1. “PY-3 partners will then meet again to decide the way forward,” we are told.

Hardy is also planning to approach the DGH for permission to extend the consortium’s contract with Aban Offshore’s Floating Production Unit (FPU) Tahara by another three months from April 30 or until the fresh PY-3 redevelopment is prepared and approved. Simultaneously, Hardy will begin negotiating with Aban to re-hire Tahara for either three years or five years after the next extension.

Aban will also be asked to submit a proposal to upgrade Tahara and outline how it wants that cost recovered over the term of any future contract. Tahara is presently working at PY-3 for just $49,000/day.

Tata Petrodyne was absent from the March 30 consortium meeting in Chennai but said it backed Hardy and ONGC’s choice of NE-1.

Hardy and partners broadly agree on Phase-I of the proposed redevelopment plan including drilling well PD-5; installing gas lift facilities; and injecting ‘associated gas’ into the producing PD-3 well, the proposed PD-5 well and the ‘plugged’ PD-4 well, where a ‘sidetrack’ failed in 2006 because of high ‘water cut.’ Further, the consortium is optimistic that PD-4 could produce up to 1000 b/d, after injecting gas to provide ‘artificial lift’. A PY-3 source says compressors meant for gas lift “will have to be designed to permit the ‘export’ of some gas too.”

Hardy and partners broadly agree on Phase-I of the proposed redevelopment plan including drilling well PD-5; installing gas lift facilities; and injecting ‘associated gas’ into the producing PD-3 well, the proposed PD-5 well and the ‘plugged’ PD-4 well, where a ‘sidetrack’ failed in 2006 because of high ‘water cut.’ Further, the consortium is optimistic that PD-4 could produce up to 1000 b/d, after injecting gas to provide ‘artificial lift’. A PY-3 source says compressors meant for gas lift “will have to be designed to permit the ‘export’ of some gas too.”